Malaysia could bring back the GST if that’s what people want, Mahathir says

Minister Mahathir Mohamad now says his government will study the possibility of bringing back the GST, if it is found to be better than the SST.
The Straits Times

More than a year after introducing the Sales and Services Tax (SST), Malaysia’s Prime Minister Mahathir Mohamad now says his government will study the possibility of bringing back the Goods and Services Tax (GST), if it is found to be better.

In a report on Thursday (Oct 3), Mahathir was quoted by The Star as saying: “If people believe it is better, we will study it.”

However, even if the GST were to make a comeback, it would unlikely be during the 2020 Budget announcement, he said. As the Budget would be tabled on October 11, Mahathir reportedly said: “Maybe we can do it later.”

Mahathir’s comments on the GST come after state news agency Bernama reported that the Malaysian Institute of Economic Research (MIER) was urging the Government to re-introduce the tax in the 2020 Budget at a lower rate of three per cent.

According to Bernama, MIER chairman Tan Sri Kamal Salih said the GST system was a “fair system”.

“GST is a fair system, some people said it is regressive because the poor will be affected. But we have exclusion clauses that will protect the lower income group, or B40,” he reportedly said.

He added that he was against the initial implementation of the SST as “no matter how you expand the SST to different sectors or how the enforcement is done, it will still not be enough to fill what (income) has been produced by GST”.

The SST officially replaced the old GST scheme on September 1, 2018, after Mahathir took power earlier in the year.

Under the SST scheme, Malaysia charges a tax of 5 per cent and 10 per cent on the sale of goods, and a 6 per cent levy on services.

Compared to the previous GST scheme, Mahathir’s SST had 10 times more exempted goods, including fresh food such as meat, eggs, vegetables and fruits.

The number of tax-applicable businesses also declined at the time, from 65.85 per cent under the GST system to 43.49 per cent under the SST.

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